It appears that the wheat market sell off was a little over done...........

[Mizzou_Tiger]

http://www.agrimoney.com/news/wheat-prices-revive-as-black-sea-fearals-ease--3210.html

we saw the same thing with the corn crop last year...........and likely to see the same thing with the HRW crop this year...........everyone was all hyped up that things were stellar and then the reality set in slowwwwwwwwwlllllllllyyyyyyyyyy.....as harvest progressed.......all of a sudden Ukraine is backing off its export numbers, Russia may be rethinking things, and remember they will not come online till July, lots can change.........factor in France......and then the US........a lot of shorts in the wheat market by individuals that don't understand production.........

http://www.agrimoney.com/news/brazil-farmers-bet-on-rain-runs-up-further-losses--3213.html

little more fuel for the supply fire too........

add in the troubles in the US and we have quite a dilemma............

just some food for thought...........I would say anyway you slice it 2012 is setting up to be tighter than 2011.........may be time to start thinking about 2012 inputs.............

any word from you folks dealing with or getting ready to deal with the MO river...........it sounds pretty much like a horror film unfolding...........this along with MS river flooding will likely knock out acres for this year and next...........highly productive acres at that.........

http://www.agriculture.com/news/crops/high-waters-getting-higher_2-ar16965

when you hear talk of 4M unplanted acres and breaking records along with all the knee high corn going under............

I think its time to stop talking about acres and yield and start talking about crop size.........at this point no one has a grip on what harvested acres will be now..........and nat avg is going down by the day..........12.4B, 12.6B, 12.8B, 13.0B, or more???  Thoughts

[jrsiajdranch]

THoguth I have is to be using a 12.5 billin nushel crop. Any hiccups from here and it lowers!

ANd I am willing to bet someting of little use to me that the corn trade will not wake up to this reality till after the damage is done!

Biggest threat going forward is how do guys who are collecting money from insurable losses replace bushels?  Gonna be some nasty finacial wars this fall!

So the question is when does the corn farmer start to realize the devistation long term that his ardent support of ethol will cause?

[Mizzou_Tiger]

So I gotta ask........with the markets inability to go higher right now......and its tendency to break down for short intervals..........and your comments about the trade being too late.......

WHY WOULDN'T an end user be securing needs thru most of 2012......shoulda been working on 2011 several months ago, maybe dang near a year ago........if the end user can average in the 6 dollar range for corn I am pretty sure he can survive no matter what he is doing......and 6 corn for 2012 is the high end......5 was not that long ago.....and 4 too....

Pissing and moaning now and getting hammered with 8 dollar corn.........is the same excuse as pissing and moaning about 5 dollar corn and getting hammered with 7 dollar corn............sorry, but there is no excuse for piss poor management.........livestock demand is not going to zero so there has to be a supply......and those that can handle the bumps will be rewarded....

I understand we have a real supply issue coming that no one wants to see until october........however blaming ethanol is a no win situation........the same could be said the other way......livestock is chewing thru supply and crunching ethanol margins........who's to say which end user has more right to a product than another.......with the obesity problem in the US and heart disease coupled with national security issues with energy independence I could argue that ethanol is just as good or better for the US population than expensive protein......remember livestock is just expensive protein.....a lot of other cheaper and more efficient ways to get your protein needs than livestock.......now I don't wanna go down that road......but sometimes people forget the basics.....

[junior359]

MT,

I  suggested  to you guy's over on ag talk less than two weeks ago that 5-10% of corn acres might not even see a planter this year. Most guy's thought that was crazy but now sure looks like 5% or 4.5 million acres  probably for prevented planting. I gotta figure there's at least another 2-3 million acres that got rushed into some very poor conditions and late as well.

I live in northwest MO. and our corn for the most part looks pretty good at least alot better than last 4 years but now the guy's along the missouri bottoms say the river to be worse than 1993. I remember that year very well so I gotta wonder if another 1-2 million acre loss there might not be possible. Don't really know how many acres along the mississippi are gone but from all I've heard a million wouldn't be out of the question? On top of all of that something just don't feel right with this weather going from coats a week ago wondering if it was to cold to be planting beans and now 97 degrees with hit and miss thunderstorms ,some getting 6 inches and others getting nothing I really gotta wonder about the rest of the summer trimming yields a little to? I really think we might have a hard time getting to 12 billion...........80 million acres harvested  x   150 ish yield.... So I ask again what do you think that will look like in the markets if it should come to pass?

My big wory at the moment is delivering july and august contracts if kansas city is under 8-10 feet of water guy's at nationa starch told me last night that 1993 water was within a foot of topping levee. that was with flows from up north of 70,000 cfs granted we had crazy rain here then also but thier talking flows of 150,000 cfs for a month or more, this is not the perfect year that was needed and noone seems to realize it................yet

[jrsiajdranch]

MT here's the thing. I have changed my mgt.  I planted more corn IF I have an average year to even 10% less than average I will have all my corn needs on farm.

However if your a big and you are into a purchased feed program guess what?  How you gonna feed PP corn to the livestock?

This isn't about correctly timed purchases of corn at profitable levels this is about have you got 100% certain delivery of the GRAIN?

THis isn't gonna be a profit issue this is gonna be a physical issue!

here we are on the fifth day of June and we have already had 3 days of 90's!  To expect normal this year is gonna be wrong!

I ahve said for quite a while my weather model showed hot for summer weather and hot with moisture is gonna be tough on this crop.  NOw I am thinking we will be drier than average. NOt a srought just a little on the dry side and you can see some more yield reduction ahead.  NOT GOOD!

[Mizzou_Tiger]

I agree this thing is going to be a real supply issue...........but if your needs are covered, then they should be covered..........like whomever said, could be some real legal issues come fall when contracts are not filled..........I would hope that most independents that are in livestock produce at least some or their feed needs.............and the big boys and corps have more than enough pricing power to get feed bought and delivered..........

but you are right........if no rationing is done, then pipeline will likely go dry...........heck I am not so sure that we won't hear about supply issues by August of this year given the late crop.........

I am still holding out for a 12.8-13.0B crop..........but thats getting harder and harder to do.........we just got hammered again this AM with a couple more inches............a lot of corn going backwards in several counties around here...........I saw a lot of marginal crops down into C IL............and seeing some post on the other website about isssues in other parts of IL..........we know IN and OH need zero weather issues to even have a chance............throw in all those Extra acres we were supposed to get from ND and SD..........well yes not a good situation.............

So what does a 12.4B crop look like............well something will have to break.......that will take carryout to zero and still come up 200M short...........you know that will not happen...........I think the best we can hope for now is a 13.3B crop, thus carryout stays the same.............IMO we probably don't go above 13B thus carryout gets even lower.............and we could 12.6B real easy...........

I am not sure the trade will pay much attention until we get a firm acreage number............and if that number is still above 90M then I think the trade waits until fall...........I agree about the weather, even though we got pounded with rain this AM, heat is building.........drought out west is supposed to expand.............if that ridge sets in and the water goes away, well all this late corn that was mudded in will just flat bake............that has intervention written all over it...........

I will reiterate soya are a sleeper..........acres will be short..........yield is falling with all these late soya.............and wheat is going to start the party again...........I forget what the USDA estimates for HRW wheat yield was supposed to be..........but I was thinking high 30's or low 40's............when you hear comments and post that the wheat is better than expected but still 30-35...........and comments that wheat in KS looks much better than TX.............and the aforementioned yield is KS yield............um HRW crop is probably in big trouble...........not to mention spring wheat up north into Canada...........haven't heard how SRW is fairing.........

[rayjenkins]

Mizzou....a few questions based on reading this thread and some of your others..

1) You had said the US wheat crop would come in 20% less than current USDA projections....still on board with that??

2) If I am interpreting your statements in this thread correctly, you believe it's the livestock industry that should cut corn usage if we have a crop that will not cover current demand projections?? Is that stance healthy for the long-term interests of the corn grower??

3) Should we have a livestock producing mandate so those folks are on the same level playing field as ethanol??

[Mizzou_Tiger]

Hi Ray, appreciate your comments.........

The wheat crop, specifically HRW, yes IMO it comes up short.........20%, well musta said it somewhere if you found that number......its going to be a shock..........and the wheat complex in general is going to continue driving this.........with spring wheat plantings and emergence so far behind now, and some European issues.........we are setting up for more issues.......I suppose the Aussies could fill some gaps, but we are in a bigger pickle now with wheat than last year........and world stocks of wheat are set to drop with lofty Russia/Ukraine numbers.........and not much reduction in US or European production yet.........a lot yet to transpire........but it doesn't look promising........

Wheat started this, and we have now drawn down corn and soya stocks and wheat will start falling too..........and this year appears like we will not fill any of the cellar........just bowls............

As for livestock vs ethanol vs whatever..........I don't know what the RIGHT answer is.........simply making a comment that you can argue both sides...........livestock is very important............ethanol is very important.............and who gets what allotment when things get short..............well again I don't have a right answer.........

IMO with the breaks we have had in price...............you could buy some pretty reasonably priced grains.........end users should have and should be preparing now..........meat demand is likely not going anywhere, so if you can control your inputs somewhat you can weather the storm..........so at the end of the day if markets are left to work.........we don't have to choose sides and exports will likely be the one rationed.............

IMO that works out a lot better for everyone..........our domestic end users remain intact thru management of inputs..........our exports become even more valuable thus helping our trade imbalance and overall economy a little.........and we don't interrupt the markets..............and IMO the last point is as important as the first............I still think if we flinch too soon it puts the idea in the minds of many that grains are now a government controlled commodity...........thus its worth what the government thinks its worth.........thus probably cheap............exactly were we just came from for the last 40 years..........cheap grain policy..........

We are for sure in between a rock and a hard spot............demand destruction.............market manipulation...............conviction.........

As for a mandate.........I understand your point...........and then we go down the road of............ok get rid of mandate for ethanol so the livestock guys can compete for corn...........but then we have to get rid of all the big oil loop holes so ethanol can compete with oil on a level playing field.............then we just question ethanol as a whole and go backwards on our energy independence in this country.............

I know you have an idea of flexing the ethanol system to make up for short falls.............however the first time we do that..........IMO it tanks everything for a long long time.........and I will ask this again......if we flex the system who decides what.......do all plants get reduced a certain percentage, is it a pro rated system based on output, or geography, or a ratio of local production versus plant output, or based on basis, or percentage of other end users, coop versus corporate, proximity to ethanol end users, debt to equity, cash flow........etc....

EDIT:  just got pounded with another line of storms.........starting to look like 2010 here again......you remember what that looked like last year Ray.......not pretty.......

[rayjenkins]

You are attempting to make the ethanol proposal more complicated than it needs to be.....for starters we are talking about less than 150 different businesses, probably quite a bit less than that due to multiple plant ownership....so the pool of folks in the discussion is relatively small...

structure it like a CRP or PIK program where folks bid into the system.....set it up by months or quarters.....put a cap on the amount of ethanol/corn that is going to be reduced.....use the money that was going to be paid out via the VEETEC (45 c/gallon) to fund the program....likely end up being a net gain to US treasury.....

the goal isn't to gut the ethanol program at all.....it's to allow all the end users to survive and be able to run at full capacity when the corn supply is fully adequate.....that will not be the case if livestock is the one that cuts usage, because some of that reduction is going to be permanent.....

your opinion on this likely depends on whether you want $10 corn for a few months followed by the distinct possibility of $4 corn for a long period of time.....or want to craft something that gives us $5 corn for a much longer period of time...

Like I said before, what we need right now in the ethanol industry is a few statesmen who are interested in the long term health of the industry and ag in general rather than a "I've got mine,. even if it came via a government mandate rather than the market" attitude.

Ray J

[Mizzou_Tiger]

Ray, I gotta say that I still see issues with that........I guess its a matter opinion.........and I do want to make clear that I don't want demand destruction.........however I guess maybe someone needs to define destruction versus rationing.........and lay out a line between the two.........because if we are talking about demand that is needed to sustain life.........then rationing and destruction are one in the same..........gotta be upright to eat it.........gotta eat to stay upright.......which then makes the case we do away with ethanol all together because it becomes a completely moral issue..........

So the two big questions I have is this..........first, is the bid system.........what kind of bids would it take to reduce output or shut down a plant for months or a quarter........I would imagine it would be substantial......we are then essentially subsidizing an industry even more not to produce.......does that not look bad, especially since the general public will see next to no improvement in the grocery isle even if grains and meat prices fall......YOU and I both know the prices in the grocery isle will move less than 1% compared to large drops in raw commodities........if we are goin to subsidize something, why not livestock.......the consumer would probably see a more direct effect...........ethanol and livestock would survive and exports would be the market were rationing occurred.......

Second question, what do you think will happen to the price of commodities at the first mention of reducing ethanol's consumption of corn.........personally we go back to $3 something.......maybe $4.........$5 will not hold........it will be just like a ban on exports........no reason to pay extra for corn because we will always have enough now..........it will take a physical supply/demand situation like what we face now..........without ethanol to get markets anywhere near where they are today........

See the thing is........since its government involvement......there has to be a protocol.......and in that protocol will be outlined conditions of what, when, where, and how this program works.........and in there will be wording like "when stocks to use falls to a certain level" or "when domestic prices hit a certain level for a certain period of time" or "when carryout reaches a certain level"...........why is that a big deal, because every trader on the planet will know when a cut in demand is coming and there will be no need to price grain any higher than cost of production...........because we all know........something will get planted every single year on a lot of acres no matter the price of grain..........ITS CALLED FARMING IN THE USA and the WORLD for that matter..........

So I guess its really a matter of if you want $2-$4 corn or something higher than that..........just remember........the rest of the world and really the rest of the population outside of AG will not care how well the AMERICAN FARMER IS DOING so many years down the road..........last time I checked when excess is flowing in the streets of public America.........not a lot of it flowed into farmers hands............

I do understand that ethanol helping out livestock is like doing a favor for your neighbor............however unless your pricing power remains intact with the final consumer..........then all you have done is sink the whole ship...........ERGO this is why I think livestock prices should be higher to keep their margins intact............and the rationing should happen on the export side.......

Again, thanks for the comments.............we definitely are in uncharted waters.........not many people fully understand it, including myself.........at least I saw the supply side problem coming many months ago........